4.12 Governments often use licensing or taxes to control the sales of certain products. Under the licensing system, sellers are required to obtain licenses, and the number of licenses is limited to a socially desirable number. Often, these licenses are sold to the highest bidder. The price of such licenses is frequently set at a level that is low enough for extensive excess demand to occur. Under the tax system, a high tax is imposed on the sale of such products. Under what circumstances would auctioning licenses be equivalent to a tax? Why might regulators or politicians favor underpricing of licenses? (Hint: Such licenses often end up in the hands of political donors or friends and associates of donors.)